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Business loan refinancing

When and how to consider refinancing a business loan

Capitalise Jul 12, 2023

Running a successful business requires smart financial management,  this can involve managing your business loans effectively. 
Business loan refinancing is a financial strategy that can help you reduce costs, improve cashflow, and optimise your overall debt structure. 

We explore the concept of business loan refinance, to help you understand when it's beneficial, and outline the steps involved in the refinancing process. 


What is business loan refinance?

Refinancing a business loan involves replacing an existing loan with a new one, typically with better terms and conditions. By refinancing a business loan, businesses can take advantage of lower interest rates, extended repayment terms, reduced monthly payments, or consolidate multiple loans into a single loan. The primary goal is to enhance the financial health of your business and create a more manageable debt structure.


When to consider refinancing a business loan

  • Lower interest rates 

One of the most common reasons to consider refinancing a business loan is when there is a significant decrease in interest rates since you obtained your initial loan. By refinancing at a lower rate, you can save on interest expenses and improve your cashflow.

  • Improved credit score

If your business credit score has improved since taking out the original loan, you may qualify for more favourable business loan terms. Refinancing a business loan at a lower interest rate can help you reduce your overall borrowing costs and increase your financial flexibility.

Top tip: Check your business credit score to see if you could refinance your existing business loans at a better rate. 

Improve your business credit score to unlock the most affordable interest rates. 

  • Changing business needs

Over time, your business needs may evolve, and your current loan terms may no longer align with your objectives. Refinancing a business loan provides an opportunity to adjust your loan structure to better suit your business's current requirements, such as longer repayment periods or different payment structures.

  • Debt consolidation

If you have multiple business loans, refinancing can simplify your debt management by consolidating them into a single loan. Consolidation streamlines your repayments, reduces administrative burden, and potentially lowers interest rates by negotiating a better deal.


How to refinance a business loan 


1. Assess your current business loans

  • Begin by evaluating the terms, interest rates, and repayment structure of your existing loans. 
  • Determine whether refinancing could provide better terms or more favourable conditions. 
  • Compare the costs and benefits to ensure refinancing makes financial sense for your business.

2. Gather documentation

  • Similar to applying for a new loan, refinancing requires documentation. 
  • Prepare your latest set of filed accounts, 6 months business bank statements and personal information such as date of birth and address.

3. Login to your Capitalise account 

  • Tell us about your funding requirments
  • Get dedicated support from a funding specialist who will help you find the best fit lenders for your business
  • Apply up to 4 lenders in one application

Refinance your business loan today.

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